If you want to run a car on UK roads, you must be insured. There’s no way around it.
While car insurance is required, traditional coverage can often be quite expensive — especially for young drivers — which can make vehicle ownership a little off-putting.
If you are a driver aged under 25, or purchasing insurance for someone who is, you will be all too familiar with the eye-watering cost of motor insurance.
There is one affordable way though — black box insurance. This new way of covering your car has grown in popularity massively over the last few years, but how exactly does it make your premiums cheaper?
In this feature, we outline why black box car insurance is an essential consideration for young drivers.
What is black box car insurance?
Black box insurance is a type of coverage that allows your insurer to monitor your driving through a telematics device — usually a small, black box (hence the name).
It has seen a huge uptake in users in recent years, thanks to the promise of cheaper insurance premiums — with young drivers benefitting most in particular. According to the British Insurance Brokers Association, in 2020, around one million drivers in the UK had telematics (or 'black box') policies. With some estimates placing uptake of telematics policies of 17-19 year-olds at around 80%.
That’s not to say older drivers can’t benefit, however – anyone can qualify for black box insurance.
For some parents, if their child passes their test and is looking to buy a car, there will be much consideration to fitting a black box. Just as with a flight recorder in an aeroplane, albeit somewhat more simple, the black box will record where, when and how one drives.
By installing telematics to a vehicle with a black box, it allows insurers to see how a car is used, how fast the cornering, how hard the braking and how much steering is used.
Being able to prove that you are a lesser risk on the road produces instant and very tangible rewards for the driver in the form of cheaper insurance, and for the nation as a whole by not having to pay for any medical treatment and aftercare following an accident.
Yet, despite all the evidence to the contrary, many UK drivers are still not convinced that having a `black box’ telematics-based insurance will bring them any dividends. Or worse, in some cases drivers could be missing out on cheaper car insurance from telematics - In a YouGov survey of over 2,000 motorists, 81% of respondents said their insurance providers hadn't told them anything about potential savings from telematics insurance, meaning many motorists could be missing out on the potential cost savings.
How does a black box work?
Say you take out a black box insurance policy. Your insurer will either send you a small plug-in device that will be required to be fitted into your vehicle by a certain time, or send an engineer if the ‘box’ needs to be hardwired into your car.
A `black box’ is essentially a small data recorder which is easily plugged into a little port, normally just under the dashboard. In it is a SIM card which will send a log to your insurer of how you drive, at what time you drive and on what sort of road, be that a twisty rural road, urban route or motorway, and it notes if you take breaks on very long journeys.
The `how you drive’ records parameters like how hard you brake and accelerate which gives a good picture of your behaviour behind the wheel. The device will record key driving information such as speed, usage and smoothness — which is fed back to your insurer and compared with other users to present a score.
Customers can monitor their own scores too, usually via a mobile app, allowing them to see if they’re perceived as a good driver by the insurer, or if there’s room to improve.
With this data the policy provider can build up a profile of your driving and base its next premium on your personal behaviour behind the wheel and the risk you represent; not just relying on the usual and often unfair criteria, such as your age group or the number of claims made from within your postcode.
What are the benefits of a black box?
There are several benefits, but the main ones are the potential for cheaper insurance premiums and less worry for family and friends.
Top reasons drivers choose black box car insurance policies:
- The potential to reduces the cost of car insurance for the driver
- Helps with theft tracking if the car is stolen
- Helps with claim management after a car accident
- Provides a financial incentive to drive safely
- Help increase self-awareness of driving style
Are there any downsides to black box insurance?
Some drivers have found being monitored and the restrictions placed on their driving habits frustrating.
Because driving at night is statistically more dangerous, some policies may impose a curfew between (usually) 11pm and 5am and unless you can prove it was for an emergency there will be a penalty for breaking it.
If you’re regularly driving aggressively, expect to see that dream of an even cheaper policy next year drop — or worse, have your currently policy cancelled for extremely dangerous driving. There will be a cost if you change your car and need the box transferred or if it’s damaged.
What’s more, with a black box installed, your exact mileage can be tracked by your insurer. If you end up covering more miles than your policy states, you’re almost certain to be charged extra fees or worse, see your policy cancelled.
Who benefits from black box insurance?
- The driver/ person insured – Cost savings
- Society – Can benefit from safer roads, due to the rewards given to the driver for safer driving
- The Environment – the technology encourages more careful and fuel-efficient driving, resulting in lower emissions
Is black box insurance always cheaper?
While it’s very dependent on driver and vehicle, black box insurance is, in most cases, cheaper.
If you’re a first-time driver or have only held a licence for a couple of years, you’re likely to benefit most — with premiums potentially half the cost than without a telematics device.
More experienced drivers can still benefit, but the cost benefit to less of an impact than for those who have spent little time behind the wheel.
With some black box insurers, drive safely and you can save more on insurance renewals — and some providers even offer extra rewards.
As it happens the cost of motor insurance fell fractionally in 2020, down by 1% to an average of £465, a four year low according to the ABI’s latest Motor Insurance Premium Tracker, but that is just a national average and younger drivers pay eye-watering amounts.
According to Finder’s research, motorists can typically save between 8% and 26% on their premiums with a black box. For the under 25s age bracket, the average comprehensive policy in 2020 cost around £1,315, but having telematics dropped that by around £223 (According to MoneySuperMarket data, accurate as of August 2020) .
It continues to be drivers in the youngest age bracket, 17-19 and 20-to-24 age bracket paying the highest annual premiums at £1,030 and £965 respectively.
The very fact that less experienced drivers who agree to have a black box and are willing to have their driving monitored should make them inherently less of a risk. And as any parent will tell you, that in itself is worth knowing.
Other factors include being able to track down your car in a crowded car park, or recover a car if it is stolen (thanks to its GPS transmitter) and being able to settle a claim faster in the event of a bump because the data can help analysts determine how your car was being driven up to that moment and even whereabouts on the car the first impact happened.